Southern California Edison seeks approval of power deal with Elk Hills

The California Public Utilities Commission at its Feb. 26 meeting will look at approving a resolution covering a power purchase deal between Southern California Edison and Elk Hills Power.

“This Resolution approves a materially-modified Combined Heat and Power Request for Offers (CHP RFO) Pro Forma Power Purchase Agreement (PPA) that Southern California Edison (SCE) executed with Elk Hills Power (Elk Hills) for energy and capacity from its 550 MW existing cogeneration facility as a result of SCE’s 2013 CHP RFO,” the resolution said. “Under the new CHP RFO PPA, the combined cycle gas turbine facility will offer a portion of its output to SCE as firm capacity and energy for 5 years.”

In December 2010, the commission adopted the Qualifying Facility and Combined Heat and Power Program Settlement Agreement with the issuance of D.10-12-035. The settlement resolves a number of longstanding issues regarding the contractual obligations and procurement options for facilities operating under legacy and qualifying facility contracts. The settlement establishes MW procurement targets and GHG Emissions Reduction Targets the investor-owned utilities (IOUs) are required to meet by entering into contracts with eligible CHP Facilities. Pursuant to D.10-12-035, the three large electric IOUs must procure a minimum of 3,000 MW of CHP and reduce GHG emissions consistent with the California Air Resources Board (CARB) Scoping Plan, currently set at 4.8 million metric tonnes (MMT) by the end of 2020.

The commission directed the three IOUs to conduct Requests for Offers (RFOs) exclusively for CHP resources as a means of achieving the MW Targets and GHG Emissions Reduction Targets. The maximum contract term for new facilities selected in an RFO is 12 years, while the maximum term for existing facilities is seven years.

Currently, Elk Hills Facility is a 550-MW combined cycle gas turbine cogeneration facility located in Tupman, Calif., that provides steam and electricity to Occidental of Elk Hills Inc. for use in natural gas processing and purification. Elk Hills will serve Occidental’s electrical demand, export to SCE (which will maintain the first right of purchase to up to the 200 MW of contract capacity), and may also sell electricity to the California ISO energy market. Elk Hills began operations as a generation facility in 2003.

In 2012, Elk Hills filed for self-certification as a Qualifying Facility with the Federal Energy Regulatory Commission and stated that it was not intending to sell its output under Section 210 of the Public Utilities Regulatory Policies Act of 1978. In December 2012, Elk Hills sought FERC’s determination on the facility’s compliance with the Fundamental Use Test in order to become eligible to participate in the CHP RFOs. In February 2013, FERC found Elk Hills as compliant with the requirements of the Fundamental Use Test. Since Elk Hills did not begin operations as a cogenerator until after the November 2011 Settlement Effective Date, it is considered a New CHP Facility in the CHP Program. SCE requests that the California PUC find that the executed agreement will count 200 MW of capacity toward the MW Target and 0.057 MT toward the GHG Target. 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.